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CFA Program Curriculum 2020 Level I Volumes 1-6 Box Set / Edition 1

CFA Program Curriculum 2020 Level I Volumes 1-6 Box Set / Edition 1

by CFA InstituteCFA Institute
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Clear, concise instruction for all CFA Program Level I concepts and competencies for the 2020 exam

The same official curricula that CFA Program candidates receive with program registration is now publicly available for purchase. CFA Program Curriculum 2020 Level I, Volumes 1-6 provides the complete Level I curriculum for the 2020 exam, delivering the Candidate Body of Knowledge (CBOK) with expert instruction on all 10 topic areas of the CFA Program. Fundamental concepts are explained in-depth with a heavily visual style, while cases and examples demonstrate how concepts apply in real-world scenarios. Coverage includes ethical and professional standards, quantitative analysis, economics, financial reporting and analysis, corporate finance, equities, fixed income, derivatives, alternative investments, and portfolio management, all organized into individual sessions with clearly defined Learning Outcome Statements. Charts, graphs, figures, diagrams, and financial statements illustrate concepts to facilitate retention, and practice questions provide the opportunity to gauge your understanding while reinforcing important concepts.

  • Learning Outcome Statement checklists guide readers to important concepts to derive from the readings
  • Embedded case studies and examples throughout demonstrate practical application of concepts
  • Figures, diagrams, and additional commentary make difficult concepts accessible
  • Practice problems support learning and retention

CFA Institute promotes the highest standards of ethics, education, and professional excellence among investment professionals. The CFA Program curriculum guides you through the breadth of knowledge required to uphold these standards.

Product Details

ISBN-13: 9781946442949
Publisher: Wiley
Publication date: 08/06/2019
Series: CFA Curriculum 2020 Series
Sales rank: 541,702
Product dimensions: 9.50(w) x 11.80(h) x 5.40(d)

About the Author

CFA Institute is the global association of investment professionals that sets the standard for professional excellence and credentials. The organization is a champion for ethical behavior in investment markets and a respected source of knowledge in the global financial community. The end goal: to create an environment where investors’ interests come first, markets function at their best, and economies grow. CFA Institute has more than 155,000 members in 165 countries and territories, including 150,000 CFA® charterholders, and 148 member societies. For more information, visit

Table of Contents

How to Use the CFA Program Curriculum ix

Curriculum Development Process ix

Organization of the Curriculum x

Features of the Curriculum x

Designing Your Personal Study Program xi

Feedback xiii

Ethical and Professional Standards

Study Session 1 Ethical and Professional Standards 3

Reading 1 Ethics and Trust in the Investment Profession 5

Introduction 5

Ethics 6

Ethics and Professionalism 9

Challenges to Ethical Conduct 11

The Importance of Ethical Conduct in the Investment Industry 15

Ethical vs. Legal Standards 17

Ethical Decision-Making

Frameworks 20

Applying the Framework 22

Conclusion 27

Summary 28

Practice Problems 29

Solutions 30

Reading 2 Code of Ethics and Standards of Professional Conduct 33

Preface 33

Evolution of the CFA Institute Code of Ethics and Standards of Professional Conduct 34

Standards of Practice Handbook 34

Summary of Changes in the Eleventh Edition 35

CFA Institute Professional Conduct Program 37

Adoption of the Code and Standards 38

Acknowledgments 38

Ethics and the Investment Industry 39

Why Ethics Matters 39

CFA Institute Code of Ethics and Standards of Professional Conduct 43

Preamble 43

The Code of Ethics 44

Standards of Professional Conduct 44

Reading 3 Guidance for Standards I–VII 49

Standard I: Professionalism 49

Standard I(A) Knowledge of the Law 49

Guidance 49

Recommended Procedures for Compliance 54

Application of the Standard 55

Standard I(B) Independence and Objectivity 58

Guidance 58

Recommended Procedures for Compliance 63

Application of the Standard 64

Standard I(C) Misrepresentation 71

Guidance 71

Recommended Procedures for Compliance 74

Application of the Standard 76

Standard I(D) Misconduct 81

Guidance 81

Recommended Procedures for Compliance 82

Application of the Standard 82

Standard II: Integrity of Capital Markets 84

Standard II(A) Material Nonpublic Information 84

Guidance 84

Recommended Procedures for Compliance 88

Application of the Standard 91

Standard II(B) Market Manipulation 96

Guidance 96

Application of the Standard 97

Standard III: Duties to Clients 101

Standard III(A) Loyalty, Prudence, and Care 101

Guidance 101

Recommended Procedures for Compliance 105

Application of the Standard 106

Standard III(B) Fair Dealing 110

Guidance 110

Recommended Procedures for Compliance 112

Application of the Standard 114

Standard III(C) Suitability 118

Guidance 118

Recommended Procedures for Compliance 121

Application of the Standard 122

Standard III(D) Performance Presentation 125

Guidance 125

Recommended Procedures for Compliance 126

Application of the Standard 126

Standard III(E) Preservation of Confidentiality 129

Guidance 129

Recommended Procedures for Compliance 131

Application of the Standard 131

Standard IV: Duties to Employers 133

Standard IV(A) Loyalty 133

Guidance 133

Recommended Procedures for Compliance 137

Application of the Standard 137

Standard IV(B) Additional Compensation Arrangements 144

Guidance 144

Recommended Procedures for Compliance 144

Application of the Standard 144

Standard IV(C) Responsibilities of Supervisors 146

Guidance 146

Recommended Procedures for Compliance 148

Application of the Standard 150

Standard V: Investment Analysis, Recommendations, and Actions 154

Standard V(A) Diligence and Reasonable Basis 154

Guidance 154

Recommended Procedures for Compliance 158

Application of the Standard 158

Standard V(B) Communication with Clients and Prospective Clients 165

Guidance 166

Recommended Procedures for Compliance 168

Application of the Standard 169

Standard V(C) Record Retention 174

Guidance 174

Recommended Procedures for Compliance 175

Application of the Standard 176

Standard VI: Conflicts of Interest 177

Standard VI(A) Disclosure of Conflicts 177

Guidance 177

Recommended Procedures for Compliance 180

Application of the Standard 180

Standard VI(B) Priority of Transactions 185

Guidance 185

Recommended Procedures for Compliance 186

Application of the Standard 188

Standard VI(C) Referral Fees 190

Guidance 190

Recommended Procedures for Compliance 190

Application of the Standard 190

Standard VII: Responsibilities as a CFA Institute Member or CFA Candidate 193

Standard VII(A) Conduct as Participants in CFA Institute Programs 193

Guidance 193

Application of the Standard 195

Standard VII(B) Reference to CFA Institute, the CFA Designation, and the CFA Program 198

Guidance 198

Recommended Procedures for Compliance 200

Application of the Standard 201

Practice Problems 203

Solutions 213

Reading 4 Introduction to the Global Investment Performance Standards (GIPS) 221

Why Were the GIPS Standards Created? 221

Who Can Claim Compliance? 222

Who Benefits from Compliance? 222

Composites 223

Verification 223

The Structure of the GIPS Standards 224

Reading 5 Global Investment Performance Standards (GIPS) 225

Preface 225

History 226

Introduction 227

Preamble—Why Is a Global Investment Performance Standard

Needed? 227

Objectives 227

Overview 228

Historical Performance Record 228

Compliance 229

Effective Date 229

Implementing a Global Standard 229

Sponsors 230

Provisions of the Global Investment Performance Standards 231

Fundamentals of Compliance 233

Input Data 235

Calculation Methodology 235

Composite Construction 236

Disclosure 237

Presentation and Reporting 240

Real Estate 242

Private Equity 247

Wrap Fee/Separately Managed Account (SMA) Portfolios 250

GIPS Valuation Principles 252

Fair Value Definition 252

Valuation Requirements 253

Valuation Recommendations 254

GIPS Advertising Guidelines 256

Purpose of the GIPS Advertising Guidelines 256

Requirements of the GIPS Advertising Guidelines 256

Verification 258

Scope and Purpose of Verification 258

Required Verification Procedures 259

Performance Examinations 262

GIPS Glossary 262

Appendix A: Sample Compliant Presentations 272

Appendix B: Sample Advertisements 289

Appendix C: Sample List of Composite Descriptions 292

Practice Problems 296

Solutions 297

Quantitative Methods

Study Session 2 Quantitative Methods (1) 301

Reading 6 The Time Value of Money 303

Introduction 303

Interest Rates: Interpretation 304

The Future Value of a Single Cash Flow 306

The Frequency of Compounding 310

Continuous Compounding 312

Stated and Effective Rates 313

The Future Value of a Series of Cash Flows 314

Equal Cash Flows—Ordinary Annuity 315

Unequal Cash Flows 316

The Present Value of a Single Cash Flow 317

Finding the Present Value of a Single Cash Flow 317

The Frequency of Compounding 319

The Present Value of a Series of Cash Flows 320

The Present Value of a Series of Equal Cash Flows 320

The Present Value of an Infinite Series of Equal Cash Flows—Perpetuity 325

Present Values Indexed at Times Other than t = 0 326

The Present Value of a Series of Unequal Cash Flows 328

Solving for Rates, Number of Periods, or Size of Annuity Payments 328

Solving for Interest Rates and Growth Rates 329

Solving for the Number of Periods 331

Solving for the Size of Annuity Payments 332

Review of Present and Future Value Equivalence 336

The Cash Flow Additivity Principle 338

Summary 339

Practice Problems 340

Solutions 345

Reading 7 Discounted Cash Flow Applications 359

Introduction 359

Net Present Value and Internal Rate of Return 360

Net Present Value and the Net Present Value Rule 360

The Internal Rate of Return and the Internal Rate of Return Rule 362

Problems with the IRR Rule 365

Portfolio Return Measurement 367

Money-Weighted Rate of Return 368

Time-Weighted Rate of Return 369

Money Market Yields 374

Summary 379

Practice Problems 381

Solutions 384

Reading 8 Statistical Concepts and Market Returns 387

Introduction 388

Some Fundamental Concepts 388

The Nature of Statistics 389

Populations and Samples 389

Measurement Scales 390

Summarizing Data Using Frequency Distributions 391

The Graphic Presentation of Data 399

The Histogram 400

The Frequency Polygon and the Cumulative Frequency Distribution 401

Measures of Central Tendency 404

The Arithmetic Mean 404

The Median 408

The Mode 411

Other Concepts of Mean 411

Other Measures of Location: Quantiles 421

Quartiles, Quintiles, Deciles, and Percentiles 421

Quantiles in Investment Practice 425

Measures of Dispersion 427

The Range 428

The Mean Absolute Deviation 428

Population Variance and Population Standard Deviation 430

Sample Variance and Sample Standard Deviation 433

Semivariance, Semideviation, and Related Concepts 437

Chebyshev’s Inequality 438

Coefficient of Variation 440

The Sharpe Ratio 442

Symmetry and Skewness in Return Distributions 445

Kurtosis in Return Distributions 451

Using Geometric and Arithmetic Means 455

Summary 457

Practice Problems 460

Solutions 467

Reading 9 Probability Concepts 471

Introduction 472

Probability, Expected Value, and Variance 472

Portfolio Expected Return and Variance of Return 494

Topics in Probability 502

Bayes’ Formula 502

Principles of Counting 506

Summary 510

Practice Problems 513

Solutions 517

Study Session 3 Quantitative Methods (2) 521

Reading 10 Common Probability Distributions 523

Introduction to Common Probability Distributions 524

Discrete Random Variables 525

The Discrete Uniform Distribution 526

The Binomial Distribution 528

Continuous Random Variables 537

Continuous Uniform Distribution 538

The Normal Distribution 541

Applications of the Normal Distribution 547

The Lognormal Distribution 549

Monte Carlo Simulation 555

Summary 561

Practice Problems 564

Solutions 571

Reading 11 Sampling and Estimation 579

Introduction 580

Sampling 580

Simple Random Sampling 580

Stratified Random Sampling 582

Time-Series and Cross-Sectional Data 583

Distribution of the Sample Mean 586

The Central Limit Theorem 586

Point and Interval Estimates of the Population Mean 589

Point Estimators 589

Confidence Intervals for the Population Mean 591

Selection of Sample Size 597

More on Sampling 599

Data-Mining Bias 599

Sample Selection Bias 602

Look-Ahead Bias 603

Time-Period Bias 603

Summary 605

Practice Problems 608

Solutions 613

Reading 12 Hypothesis Testing 619

Introduction 620

Hypothesis Testing 621

Hypothesis Tests Concerning the Mean 630

Tests Concerning a Single Mean 630

Tests Concerning Differences between Means 638

Tests Concerning Mean Differences 642

Hypothesis Tests Concerning Variance 646

Tests Concerning a Single Variance 646

Tests Concerning the Equality (Inequality) of Two Variances 648

Other Issues: Nonparametric Inference 652

Tests Concerning Correlation: The Spearman Rank Correlation Coefficient 653

Nonparametric Inference: Summary 656

Summary 656

Practice Problems 660

Solutions 668

Reading 13 Technical Analysis 675

Introduction 675

Technical Analysis: Definition and Scope 676

Principles and Assumptions 676

Technical and Fundamental Analysis 678

Technical Analysis Tools 680

Charts 680

Trend 689

Chart Patterns 692

Technical Indicators 703

Cycles 720

Elliott Wave Theory 721

Intermarket Analysis 724

Summary 726

Practice Problems 729

Solutions 734

Appendices 737

Glossary G-1

Index I-1

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